“There's an increasing number of viewers who are prepared to pay for ad free content”

HBO Asia and Eros International have collaborated to launch two new advertising free premium movie channels in India namely, HBO Defined and HBO Hits. The two channels will be available on both SD (Standard Definition) and HD (High Definition). The channels would be fully owned by HBO with an equal profit sharing agreement between HBO and Eros International.

Since the channels will be free from advertising, the reliance for revenues would be solely on a subscription model. Currently, the channel owners plan to price the two channels in the range of Rs 100 but the final price is not settled as yet. While the two organisations are still amidst conversations with DTH players, they aim at reaching 75 million subscribers after the launch. Their aim is to reach 100 million subscribers in three to five years of launch. 

HBO Defined and HBO Hits will be capitalising on the assets of both HBO and Eros International's libraries (both of which have more than 1,000 movies at present). So the programming line-up will have a mix of Hollywood and Bollywood cinema. Besides, HBO Hits will be airing Hollywood movie premieres on Indian television and existing HBO original series like Sex and The City, Entourage and Game of Thrones; HBO Defined will air HBO documentaries and HBO original series which will be released close to their US air-dates. 

Jonathan Spink, chief executive officer, HBO Asia, said, "The opportunity to work with Eros, who has such a visibly dominant presence in the Indian film and entertainment arena, is tremendous and together we will aim to deliver a first class cinema experience in the comfort of your home, 100 per cent advertising free." 

Kishore Lulla, executive chairman, Eros International, said, "I’m very excited about building the Eros brand in premium pay television, particularly with an industry leader such as HBO Asia. There are few global companies that have mastered the premium film and TV space like HBO and their global success says it all. We look forward to cultivating new spaces together in India and especially the development of HBO content for TV and online."

Excerpts from the interaction with Spink:

Campaign India(CI): What makes the Indian market peculiar in the Asia framework? 

Jonathan Spink (JS): I think India has been a bit unusual in the pace at which it's adopted premium channel offering. As much as it's nice to have 300-400 channels, people might only watch five to six of them. Therefore, having some channels free from advertising is something that people might easily be prepared for. People always buy half of the basic channels full of advertising anyway. Very good premium penetration is probably in 30 per cent of households even in the US. But if you are a movie lover who wants to watch his movies free from advertising, well, that's what we are offering.

CI: You've recently launched two HD channels in Singapore. The new channels to be launched in India would be ad-free as well. Is HBO moving toward subscription model in the entire market?

JS: HBO really is a subscription based service everywhere in the world. India is unique in that aspect wherein we have to depend on advertising revenue but everywhere else it's subscription based premium service that brings in the revenue.Things have started changing in India and therefore we thought it was the right time to offer two premium channels to the viewers. The basic service is going to continue nevertheless, because it is understood that not everybody will be willing to pay for subscription services. Therefore, the right thing to do is to offer both. But there's an increasing number of viewers who are prepared to pay for advertising free content. This just offers them a bit of a choice. 

CI: Of the 23 markets for HBO in Asia, how many have HD offering at present? 

JS: Four of them - Singapore, Hong Kong, Malaysia and Indonesia. Even Mongolia now. It's growing. 

CI: What part of the revenue (in these four markets) comes from subcription fees for HD channels?

JS: We are treating HD as a technical progression from SD and not as a different source of revenue. I think in ten years from now, every channel would be HD. In Singapore, when we put the SD channels into HD, we didn't change the price of the package. There's a 70-80 per cent penetration of digital set-top boxes in homes now. And they pay the same price for our HD channels as they would for HBO's SD channels. 

CI: For the first time, HBO Asia has produced a locally commissioned TV drama (Serangoon Road) in Singapore. Is that an effective model? And would you be looking at following that pattern in India and other Asian markets as well? 

JS: Serangoon Road is our first one for South-East Asia. It'll come on air next year. But this is an area we want to get into. HBO in the US has made its name for its original series. We've always looked for the right model, the right stories and how do we emulate it in Asia. Obvisouly, cost is effective because we don't want to produce anything that's cheap and nasty. It's a growing area for us in Asia. These series are not produced with the purpose of making more money. People are already paying for the entire package. This is just to add better value to that package.The more we put into it (the package), the more we get out of it (in the form of more subscribers). You can't judge the specific economics of producing one programme.

And these locally commissioned TV dramas can be taken to other markets as well. While the US dramas are much liked overall, there are a lot of great stories everywhere in the world and that's what we want to tap into.

CI: HBO USA has a concept of HBO Documentaries as well. Any plans of bringing that or any other US properties down to HBO Asia? 

JS: It's a nice and interesting concept but we don't have any plans of introducing them to the Asian markets anytime soon. But we are planning to introduce HBO Go (web based platform that offers HBO content for streaming viewing) in Hong Kong next year.We have ambitions for that to come to India as well. I can't give a timeline to that considering the issues of internet penetration but sooner rather than later.